Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 28, Problem 5RQ
To determine
Relevance of total GDP .
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Why is per capita gross domestic product (per capita GDP) better than gross domestic product (GDP) as a measure of a country's wealth?
O Location and land mass have a large effect on GDP and must be considered in assessing a country's economy.
O Because per capita GDP takes population into account, it is more useful for comparing the standard of living in different countries.
O Per capita GDP provides information on income, while GDP only provides information on investment.
O Per capita GDP includes the value of land, minerals, and crops not counted by normal GDP.
The advantages of the sole proprietorship include
O ease of start-up
© full control ob business decisions
© exclusive rights to profits
© all of the above
Table 7P - 1 shows the price of inputs and the price of outputs at each step in the production process of mak ing a shirt Assume that each of these steps takes place within the country . [LO 7.1 , 7.3 ] a. What is the total contribution of this shirt to GDP , using the standard expenditure method ? b . If we use a value -added method (i.e , summing the value added by producers at each step of the production process , equal to the value of output minus the price of inputs ) , what is the contribu tion of this shirt to GDP ? c If we mistakenly added the price of both inter mediate and final outputs without adjusting for value added , what would we find that this shirt contributes to GDP ? By how much does this overestimate the true contribution
QUESTION 3 What was the approximate level of GDP production in the United States in 2015? Oa. $18 trillion O b. $1.8 trillion O c. $180 billion O d. $1,800 million Oe. $18 billion
Chapter 28 Solutions
Economics (Irwin Economics)
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- 4. How is GDP per capita calculated differently from labor productivity? 5. How do gains in labor productivity lead to gains in GDP per capita? 6. What is an aggregate production function? 7. What is capital deepening? 8. What do economists mean when they refer to improvements in technology? 9. For a high-income economy like the United States, what aggregate production function elements are most important in bringing about growth in GDP per capita? What about a middle-income country such as Brazil? A low- income country such as Niger? 10. List some arguments for and against the likelihood of convergence. 11. Say that the average worker in Canada has a productivity level of $30 per hour while the average worker in the United Kingdom has a productivity level of $25 per hour (both measured in U.S. dollars). Over the next five years. say that worker productivity in Canada grows at 1% per year while worker productivity in the UK grows 3% per year. After five years, who will have the higher…arrow_forwardLearning Outcomes Covered: LO 2. Explain how the following key aggregate economic variables are defined and measured: the price level, national income, employment, unemployment, the labor force, the unemployment rate, the rate of inflation, the exchange rate. LO3. Understand how national expenditure and national product are measured and how the equilibrium level of national income is achieved. Graduate Attributes: Effective communication (1) Scholastic rigor and practical competence (2) Lifelong Learning (4) Autonomy and Accountability (5)arrow_forwardWhat are spillover effects and how do they affect growth? (LO27-4)arrow_forward
- economic Suppose that an economy’s production function is Cobb–Douglas with parameter a=0.3. a. What fractions of income do capital and labor receive? b. Suppose that immigration increases the labor force by 10 percent.What happens to total output (in percent)? The rental price of capital? The real wage? c. Suppose that a gift of capital from abroad raises the capital stock by 10 percent.What happens to total output (in percent)? The rental price of capital? The real wage? d. Suppose that a technological advance raises the value of the parameter A by 10 percent. What happens to total output (in percent)? The rental price of capital? The real wage?arrow_forwardWhich of these statements is not true when we discuss GDP calculation? O a. GDP includes earnings of both the citizens and non-citizens but are residing inside the country. Ob. Incomes made by a citizen outside of his country will be included in the calculation of GDP O c. Expenditures of citizens and non-citizens made inside the country is included in GDP calculation O d. Incomes made by expatriates are included in the calculation of GDParrow_forward14)Suppose that the annual rates of growth of real GDP of Econoland over a five-year period are as follows: Year Growth Rate (%) 1 3 2 1 3 – 2 4 4 5 5 Instructions: Round your answers to 2 decimal places. a. What was the average of these growth rates in Econoland over these 5 years? b. What term would economists use to describe what happened in year 3? (Click to select) Expansion Recession c. If the growth rate in year 3 had been a positive 2 percent rather than a negative 2 percent, what would have been the average growth rate?arrow_forward
- 3) Suppose that Alpha and Omega have identically sized working-age populations but that total annual hours of work are much greater in Alpha than in Omega. This could happen because more of Alpha’s labor force is unemployed, or Omega workers place a lower value on leisure than those in Alpha. Omega’s labor force is underemployed, or Omega workers place a higher value on leisure than those in Alpha. Alpha’s labor force is underemployed, or Omega workers place a higher value on leisure than those in Alpha. more of Omega’s labor force is unemployed, or Omega workers place a lower value on leisure than those in Alpha.arrow_forward7) Assume that a tire company sells 4 tires to an automobile company for $400, anothercompany sells a compact disc player for $500, and the automobile company puts all of theseitems in or on a car that it sells for $20,000. In this case, how much GDP has been generated?a. $20,000.b. $20,000 less the automobile company’s profit on the car.c. $20,900.d. $20,900 less the profits of all three companies on the items that they sold.arrow_forwardWhy dues productivity growth in high-income economies not slow down as it runs into diminishing returns from additional investments in physical capital and human capital? Does this show one area where the theory of diminishing returns fails to apply? Why or why not?arrow_forward
- Suppose that 10 workers were required in 2010 to produce 40,000 bushels of wheat on a 1,000-acre farm. a. What is the average output per acre? Per worker? b. If in 2020 only 8 workers produce 44,000 bushels of wheat on that same 1,000-acre farm, what will be the average output per acre? Per worker? c. By what percentage does productivity (output per worker) increase over those 10 years? Over those 10 years, what is the average annual percentage increase in productivity?arrow_forwarda. What do you understand by Real GDP? What is the Real GDP Growth Rate of India andChina in 2019? What is the estimated real GDP growth rate of India and China in 2020?What is the projected real GDP growth rate of India and China in 2021 and 2022? b. What is the estimated 2022 GDP Loss (in percentage) in comparison to pre-covid levels(January 2020 forecast) in China and Other Emerging Economies in Asia other thanChinaarrow_forwardTable 9P - 2 uses data for the year 2016 , adjusted to be comparable to each other . All population values are in thousands . a . Fill in the bîanks in the table . [LO 9.1 ] b . In part a, you should have found that the unem ployment rates of the three countries differ significantly from one another . Suggest three possible reasons to explain why the countries might have different unemploym country working-age population labor force employed unemployed unemployment rate (%) labor-force participation rate (%) japan 110849 64460 2160 france 31164 3520 56.1 germany 76066 46096 5.7 ent rates .arrow_forward
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